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An Assessment of the Current Account Sustainability in Romania – An Inter-temporal Perspective

Author

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  • Dumitru, Ionut

    (Academy of the Economic Studies Bucharest)

  • Dumitru, Ionela

    (Academy of the Economic Studies Bucharest.)

Abstract

This paper assesses the sustainability of the CA deficit in Romania by estimating its structural component, based on an inter-temporal perspective. Using a large sample of panel data, we estimated long term relationships for the CA deficit and its fundamentals. The main conclusion of the paper is that there is an excessive CA deficit which should be adjusted. The results are showing that the structural CA could range between 6.3% and 10.9% of GDP, depending on the model used and the econometric procedure. Another important result of the paper is that the main drivers of the CA deficit in Romania, as well for other transition countries of Europe, are the economic convergence factors.

Suggested Citation

  • Dumitru, Ionut & Dumitru, Ionela, 2009. "An Assessment of the Current Account Sustainability in Romania – An Inter-temporal Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(2), pages 23-41, June.
    • Handle: RePEc:rjr:romjef:v:6:y:2009:i:2:p:23-41
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    Cited by:

    1. Daniel Ştefan BELINGHER, 2016. "A Three-Dimensional Approach On The Ricardian Equivalence In Romania," Romanian Economic Business Review, Romanian-American University, vol. 11(2), pages 112-122, June.
    2. Isadora LAZAR & Madalina Ecaterina ANDREICA, 2013. "Current Account Balance, Private Debt And Euro Area Sovereign Debt Crisis: A Comparison Of North And South," Romanian Journal of Economics, Institute of National Economy, vol. 37(2(46)), pages 40-52, December.

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    More about this item

    Keywords

    structural CA deficit; convergence; relative income; Ricardian equivalence;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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